Market Report with Paul Wareing - Feb 14, 2017

Written on the 14 February 2017

An optimistic economic outlook from the Reserve Bank of Australia was a highlight of last week.

After leaving interest rates on hold the Bank revealed it expected economic growth to be around 3% over the next couple of years exceeding market expectations of 2.5%. Increased exports and a lesser effect of subdued mining investment were the main contributory factors to the optimism. Riding on the back of comparative global optimism and hopes of a strong reporting season, the ASX200 index ( the top 200 ASX listed companies by market capitalisation) recorded a weekly increase of 1.8%.

Overseas, The Donald excited markets with his pronouncement that "something phenomenal in terms of tax" will be announced in the next 2 or 3 weeks. This helped a rather subdued Dow Jones rally into the end of the week and saw strength in the US Dollar.

Looking ahead this week, locally we have the NAB Business survey on Wednesday and employment numbers on Thursday.  Business confidence has been strong of late and that looks set to continue. The focus on the employment data will most likely be the unemployment rate. A sustained rise over the coming months may give the RBA the driver it needs to cut interest rates. Overseas, it will be the usual focus on President Trump's statements particularly now he's focused on tax cuts and pulling back financial sector regulations.

In conclusion, the reporting season continues with all eyes on the resource sector. Last year's rise in coal and iron ore prices should prove positive and see some upward momentum in resource stocks.

Paul Wareing
Investment Adviser
Barclay Wells Ltd
41 Carnarvon St Broome
0411 809 104
paul@barclaywells.com

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